INVESTMENT FUNDS AND COMPANIES AS INSTITUTIONAL INVESTORS IN FINANCIAL MARKETS
Keywords:
investment fund, investment company, open fund, closed fund, financial and capital marketAbstract
Investment funds collect and invest funds in different kinds of assets to provide revenues and reduce investment risks. In practice, there are two types of investment funds: open and closed type of funds.
Open investment funds are a social segment for fund management with continuous change in the number of owners and market price of capital. These funds acquire their assets by selling their shares, for which they are capable of at any moment as well as purchasing their issued shares from investors. State investment funds are also of the open type. Open investment funds can be classified as:
- asset value increase funds,
- revenue and growth funds,
- balanced funds and
- asset value preservation funds
Closed investment funds have a fixed number of issued shares which are initially sold in a financial market. Share selling is performed through public offering (tenders). As a rule, these funds do not purchase issued shares from their shareholders. Issued shares can be traded in a secondary market through a stock exchange.
Financial companies act as mediators in financial markets. They sell their shares and thus generate the capital and assets aimed for further investing. Investment companies are also called a 'supermarket' for investment funds. These companies possess the shares of several funds, have their own portfolio and management. In financial markets, investment companies are called liquid investment funds. They are more of a closed then open type of funds.
In capital markets, investment companies invest in shares (common and preferential ones), bonds and collateralized mortgage obligations.
Investment aims of companies are dependent on investment aims of funds. These aims are outlined in funds' catalogues and are taken over by the companies. Investment companies must be organized in a way which makes sure they are capable of performing the assigned function. They must have certain organizational structure such as: assembly, board of directors, investment consultants, distribution and selling network and certain type of employees.
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